Unaudited condensed consolidated interim financial statements for the 3 and 6 months ended June 30, 2018 and 2017
Alphamin Resources Corp.
Continued in the Republic of Mauritius
Date of incorporation: 12 August 1981
Corporation number: C125884 C1/GBL
TSX-V share code: AFM
JSE share code: APH
ISIN: MU0456S00006
(“Alphamin” or the “Company”)
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
C/o ADANSONIA MANAGEMENT SERVICES LIMITED, Suite 1, PERRIERI
OFFICE SUITES, C2-302, Level 3, Office Block C, La Croisette, Grand Baie 30517,
Mauritius
Phone: +230 269 4166
www.alphaminresources.com
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
TABLE OF CONTENTS
Consolidated statement of financial position 3
Consolidated statement of loss and comprehensive loss 4
Consolidated statement of cash flows 5
Consolidated statement of changes in stockholders’ equity 6
Notes to the financial statements 7
Notice to Reader
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the
condensed interim financial statements, they must be accompanied by a notice indicating that the financial
statements have not been reviewed by an auditor.
The accompanying unaudited condensed consolidated interim financial statements of the Company have been
prepared by and are the responsibility of the Company’s management.
The Company’s independent auditor has not performed a review of these unaudited condensed consolidated
interim financial statements in accordance with standards established for a review of condensed interim financial
statements by an entity’s auditor.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ALPHAMIN RESOURCE CORP. June 30, December 31,
Consolidated Statements of Financial Position 2018 2017
As at
(Expressed in US dollars) $ $
ASSETS
Current assets
Consumable Stores (Note 4) 1,633,417 1,155,564
Prepaids and other receivables (Note 3) 17,272,415 8,952,444
Cash and cash equivalents 37,104,533 7,236,425
Total current assets 56,010,365 17,344,433
Non-current assets
Plant and equipment (Note 5) 4,079,926 4,067,827
Prepaids and other receivables (Note 3) 482,652 463,739
Mine under construction (Note 6) 145,985,256 99,504,474
Exploration and evaluation assets (Note 7) 2,201,450 2,201,450
Total non-current assets 152,749,284 106,237,490
Total assets 208,759,649 123,581,923
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities (Note 8) 7,843,728 5,965,815
Accounts payable and accrued liabilities - related parties (Note 10) 223,833 304,468
Warrants (Note 11) 9,954,606 3,476,167
Total current liabilities 18,022,167 9,746,450
Non-current liabilities
Provision for closure and reclamation (Note 12) 1,974,894 1,974,894
Long term-debt (Note 13) 21,434,700 6,920,731
Long term-debt - related parties (Note 13) 9,743,448 3,150,071
Total non-current liabilities 33,153,042 12,045,696
Stockholders’ Equity
Capital stock (Note 9) 173,134,433 122,298,092
Reserves (Note 9) 9,377,722 9,200,050
Foreign Currency Translation Reserve (1,511,737) (1,511,737)
Accumulated deficit (49,461,593) (46,166,910)
Stockholders’ equity 131,538,825 83,819,495
Non-controlling interest 26,045,615 17,970,282
Total equity 157,584,440 101,789,777
Total liabilities and equity 208,759,649 123,581,923
Approved and authorised by the Board of Directors on August 29, 2018.
(Signed) (Signed)
__________________________
BORIS KAMSTRA, DIRECTOR EOIN O’DRISCOLL, DIRECTOR
The accompanying notes are an integral part of these consolidated financial statements.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
CONSOLIDATED STATEMENT OF LOSS AND COMPREHENSIVE
LOSS
ALPHAMIN RESOURCES CORP. For the For the For the For the
Consolidated Statements of Loss Six months Six months Three months Three months
For the periods ended 30-Jun 30-Jun 30-Jun 30-Jun
(Expressed in US dollars) 2018 2017 2018 2017
US$ US$ US$ US$
Operating expenses:
Accounting, audit and legal 259,750 518,139 56,296 285,033
Administrative 532,007 197,294 360,168 76,900
Bank charges and interest 581,660 78,098 162,898 28,416
Consulting fees 11,450 434,616 1,225 337,175
Directors fees 122,588 91,479 71,882 41,706
Depreciation (Note 5) 204,580 112,978 73,540 70,416
Foreign exchange loss (gain) (231,707) (40,150) (7,022) (15,392)
Management fees and salaries 2,143,176 1,552,364 1,285,923 846,845
Investor relations, filing and transfer fees 136,654 53,651 56,496 14,233
Insurance 16,045 19,752 6,034 10,118
Share-based payments (Note 9) 177,672 80,955 88,836 38,501
Warrants (Note 11) (2,531,962) - (1,668,823) -
Telecommunication costs 96,641 44,100 54,150 25,261
Travel and accommodation 285,757 289,003 172,231 153,729
Loss on write off of assets 503,345 - (1) -
Withholding taxes - 168,000 - 84,000
TOTAL 2,307,656 3,600,279 713,833 1,996,941
Finance income (1,472) - (443) -
Net loss and total comprehensive loss for the period 2,306,184 3,600,279 713,390 1,996,941
Loss and total comprehensive loss attributable to ;
Equityholders 1,399,496 2,987,697 295,089 1,679,079
Non-controlling interests 906,688 612,582 418,301 317,862
2,306,184 3,600,279 713,390 1,996,941
Net Loss Per Share – Basic and Diluted ** (0.00) (0.01) (0.00) (0.00)
** Weighted average number of shares used in the
calculation of net loss per share 679,577,354 429,785,897 706,728,560 429,785,897
The accompanying notes are an integral part of these consolidated financial statements.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
CONSOLIDATED STATEMENT OF CASH FLOWS
ALPHAMIN RESOURCES CORP.
Consolidated Statements of Cash Flows For the Six For the Six For the Three For the Three
For the year ended months ended months ended months ended months ended
30 June 30 June 30 June 30 June
2018 2017 2018 2017
Cash Flows From Operating Activities
Net loss before interest income for the period/year (2,307,656) (3,600,279) (713,833) (1,996,941)
Adjustments for items not involving cash
Share-based payments 177,672 80,955 88,836 38,501
Warrants (2,531,962) - (1,668,823) -
Loss on write off of assets 503,345 - - -
Depreciation 204,580 112,978 73,540 70,416
Change in working capital items: -
Prepaids and other receivables - current (8,272,521) (476,939) (3,840,815) (123,868)
Consumable stores (477,853) (65,427) (421,213) (54,443)
Accounts payable and accrued liabilities 1,877,913 671,510 2,832,546 635,144
Due to related parties (80,635) 68,001 3,000 31,438
Cash used in operations (10,907,117) (3,209,201) (3,646,762) (1,399,753)
Interest income 1,472 - 443 -
Net Cash Used in Operating Activities (10,905,645) (3,209,201) (3,646,319) (1,399,753)
Cash Flows From Investing Activities
Purchase of equipment (720,024) (732,415) (151,501) (445,322)
Disposal of equipment - - - -
Investing in exploration and evaluation assets - (8,361,719) - (5,305,169)
Investing in mine under construction (45,762,071) (27,597,045) -
Prepaids and other receivables - non current (66,363) 1,407,074 (17,121) 1,500,000
Net Cash Used in Investing Activities (46,548,458) (7,687,060) (27,765,667) (4,250,491)
Cash Flows From Financing Activities
Issue of shares by subsidiary company (Note 7) 7,086,834 - 7,086,834 -
Proceeds from drawdown of long term debt 25,000,000 - 25,000,000 -
Proceeds from common stock and warrants 55,235,377 7,606,020 14,957,094 7,606,020
Net Cash Provided by Financing Activities 87,322,211 7,606,020 47,043,928 7,606,020
Effect of foreign exchange on cash and cash equivalents
Increase (Decrease) in cash and cash equivalents 29,868,108 (3,290,241) 15,631,942 1,955,776
Cash and cash equivalents at beginning of period 7,236,425 8,648,895 21,472,591 3,402,878
Cash and cash equivalents at end of period/year 37,104,533 5,358,654 37,104,533 5,358,654
The accompanying notes are an integral part of these consolidated financial statements.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
The accompanying notes are an integral part of these consolidated financial statements.
ALPHAMIN RESOURCES CORP. Capital Stock Reserves Foreign Total
Share-based Currency Stockholders' Non-
Condensed Consolidated Interim Statement of Changes in Payment Translation Equity Controlling
Stockholders' Equity Shares Amount Reserve Reserve Deficit (Deficiency) Interests Total Equity
(Expressed in US dollars) # $ $ $ $ $
Balance, December 31, 2016 429,785,897 104,277,696 8,956,258 (1,511,737) (41,808,168) 69,914,049 11,003,344 80,917,393
Loss for the period - - - - (1,308,618) (1,308,618) (286,975) (1,595,593)
Share based payment - - 42,454 - - 42,454 - 42,454
Balance, March 31, 2017 429,785,897 104,277,696 8,998,712 (1,511,737) (43,116,786) 68,647,885 10,716,369 79,364,254
Loss for the period - - - - (1,679,079) (1,679,079) (304,213) (1,983,292)
Share based payment - - 38,501 - - 38,501 - 38,501
Equity received (Convertible loan) - 7,606,020 - - - 7,606,020 - 7,606,020
Balance, June 30, 2017 429,785,897 111,883,716 9,037,213 (1,511,737) (44,795,865) 74,613,327 10,412,156 85,025,483
Balance, December 31, 2017 522,251,209 122,298,092 9,200,050 (1,511,737) (46,166,910) 83,819,495 17,970,282 101,789,777
Loss for the period - - - - (1,104,407) (1,104,407) (488,387) (1,592,794)
Private placement 169,793,397 32,482,882 - - - 32,482,882 32,482,882
Share based payment - - 88,836 - - 88,836 88,836
Balance, March 31, 2018 692,044,606 154,780,974 9,288,886 (1,511,737) (47,271,317) 115,286,806 17,481,895 132,768,701
Loss for the period - - - - (295,089) (295,089) (418,301) (713,390)
Private placement 76,800,000 14,957,094 - - - 14,957,094 14,957,094
Shares for debt 17,389,387 3,396,365 - - - 3,396,365 3,396,365
Issue of shares by subsidiary company - - - - (1,895,187) (1,895,187) 8,982,021 7,086,834
Share based payment - - 88,836 - - 88,836 88,836
Balance, June 30, 2018 786,233,993 173,134,433 9,377,722 (1,511,737) (49,461,593) 131,538,825 26,045,615 157,584,440
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
NOTES TO THE FINANCIAL STATEMENTS
1. NATURE AND CONTINUANCE OF OPERATIONS
Alphamin Resources Corp. (the “Company”) is governed by the laws of Mauritius. The Company is
in the business of locating, acquiring, exploring, evaluating and, if warranted, developing mineral
properties. The registered office is located at C/o ADANSONIA MANAGEMENT SERVICES
LIMITED, Suite 1, PERRIERI OFFICE SUITES, C2-302, Level 3, Office Block C, La Croisette, Grand
Baie 30517, Mauritius. The Company was previously incorporated under the laws of British
Colombia, Canada, however it was continued in Mauritius effective on September 30, 2014. The
Company’s shares are listed on the Toronto Stock Exchange’s TSX Venture Exchange (primary
listing) and the Johannesburg Stock Exchange’s Alternative Exchange (Alt.X) (secondary listing).
These unaudited condensed consolidated interim financial statements have been prepared on the
basis of accounting principles applicable to a going concern, which assumes the realisation of assets
and satisfaction of liabilities in the normal course of business. From 2015, the Company has focussed
exclusively on its principal project in the Democratic Republic of Congo (DRC). During 2017 the
Company concluded an updated feasibility study on its principal exploration and evaluation asset.
Although positive, the success of the Company’s future activities is influenced by financial risks, legal
and political risks and commodity prices.
As at June 30, 2018, the Company has no source of operating cash flows, has not yet achieved
profitable operations, has accumulated losses of $49,461,593, stockholders’ equity of $131,538,825
and working capital of $39,988,198 and expects to incur further losses and cash outflows in the
development of its business.
The Company’s going concern risk profile has improved during the six months ended June 30, 2018,
pursuant to raising additional debt and equity funding.
These unaudited condensed consolidated interim financial statements do not give effect to
adjustments that would be necessary to the carrying value and classification of assets and liabilities,
should the Company be unable to continue as a going concern. Such adjustments could be material.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF PREPARATION
These unaudited condensed consolidated interim financial statements, including comparatives, have
been prepared using accounting policies consistent with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB) and Interpretations issued
by the International Financial Reporting Interpretations Committee (IFRIC).These unaudited
condensed consolidated interim financial statements have been prepared on a historical cost basis
except for share-based payments and financial instruments classified at fair value through profit or
loss, which have been measured at fair value. In addition, the financial statements have been
prepared using the accrual basis of accounting, except for cash flow information.
B. BASIS OF CONSOLIDATION
These consolidated financial statements incorporate the financial statements of the Company and its
controlled subsidiaries. Control exists when an investor (the Company) has power over an investee
(the Subsidiaries) that give it the current ability to direct the relevant activities, i.e. the activities that
significantly affect the investee’s returns. The consolidated financial statements include the accounts
of the Company and its controlled subsidiaries, as follows:
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NAME OF SUBSIDIARY COUNTRY OF INCORPORATION PRINCIPAL ACTIVITY
Alphamin Bisie Mining SA Democratic Republic of the Congo Mineral exploration (80.75%
(formerly called Mining and owned by Alphamin
Processing, Congo, SARL) Resources (BVI) Ltd)
Alphamin South Africa (Pty) South Africa Holding Company (100%
Limited wholly owned by Parent)
Alphamin Holdings (BVI) Ltd* British Virgin Islands Holding Company (100%
wholly owned by Parent)
Alphamin Resources (BVI) British Virgin Islands Holding Company (100%
Ltd* wholly owned by Alphamin
Holdings (BVI) Ltd)
*These subsidiaries were incorporated as part of the acquisition of Alphamin Bisie Mining SA (formerly called Mining and
Processing Congo, SARL).
All intercompany transactions and balances have been eliminated.
Following the receipt of mining license number PE13155 and in line with Article 71 of the Mining
Code 2002, 5% of the Class B shares of Alphamin Bisie Mining SA, were issued to the Government
of the Democratic Republic of the Congo.
On December 31, 2015 Alphamin Bisie Mining SA received the first two tranches of the proposed
$10 million investment by the Industrial Development Corporation of South Africa Limited (IDC) in
the amount of $7 million, resulting in 10.45% ownership in ABM. The final tranche of $3 million was
received in the quarter ended June 30, 2016, which brought the IDC’s ownership of ABM to 14.25%.
The Government of the Democratic Republic of the Congo owns a non-diluting 5% resulting in a
Group ownership of 80.75%.
C. MEASUREMENT UNCERTAINTY AND CRITICAL JUDGEMENTS
The preparation of financial statements in accordance with IFRS as issued by the International
Accounting Standards Board (IASB) and interpretations of the International Financial Reporting
Interpretations Committee (IFRIC) requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Such estimates and assumptions, which by their nature are uncertain, affect the
carrying value of assets, impact decisions as to when exploration and evaluation costs should be
capitalised or expensed and affects estimates for rehabilitation provisions. Other significant
estimates made by the Company, include factors affecting valuations of share-based compensation
and income tax accounts. The Company regularly reviews its estimates and assumptions, however
actual results could differ from these estimates and these differences could be material. Significant
assumptions about the future and other sources of estimation uncertainty that management has
made at the end of the reporting period, that could result in a material adjustment to the carrying
amounts of assets and liabilities in the event that actual results differ from assumptions made, relate
to, but are not limited to, the following:
PROVISION FOR CLOSURE AND RECLAMATION
The Company’s operations are subject to environmental regulations in the Congo. Upon
establishment of commercial viability of a site and subsequent commencement of production, the
Company estimates the cost to restore the site following the completion of commercial activities and
depletion of reserves.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
These future obligations are estimated by taking into consideration closure plans, known
environmental impacts, and internal and external studies, which estimate the activities and costs that
will be carried out to meet the decommissioning and environmental rehabilitation obligations. The
Company records a liability and a corresponding asset for the present value of the estimated costs
of legal and constructive obligations for future mine rehabilitation. During the mine rehabilitation
process, there will be a probable outflow of resources required to settle the obligation and a reliable
estimate can be made of those obligations. The present value is determined based on current market
assessments using the risk-free rate of borrowing which is approximated by the yield of government
bonds with a maturity similar to that of the mine life. The discounted liability is adjusted at the end of
each period with the passage of time. The provision represents management’s best estimate of the
present value of the future mine rehabilitation costs, which may not be incurred for several years or
decades, and, as such, actual expenditures may vary from the amount currently estimated. The
decommissioning and environmental rehabilitation cost estimates could change due to amendments
in laws and regulations in the Congo. Additionally, actual estimated costs may differ from those
projected as a result of a change over time of actual remediation costs, a change in the timing for
utilization of reserves and the potential for increasingly stringent environmental regulatory
requirements.
Exploration and Evaluation Assets and Mine under construction
During the period the Company continued with its process of exploring and evaluating its Exploration
and Evaluation Assets. During December 2017, the Company assessed the technical feasibility and
commercial viability of its Bisie Project, together with the availability of project funding and formally
approved the commencement of full scale development activities, resulting in the reclassification of
the Exploration and Evaluation Asset to Mine under construction. The recoverability of the amounts
shown for Exploration and Evaluation Assets and/or Mine under construction are dependent upon
the successful future development of the project, the ability of the Company to obtain necessary
financing to complete the development of the project and upon future production or proceeds from
the disposition thereof.
Assumptions are used in estimating the Group’s reserves and resources that might be extracted from
the Group’s properties. Judgement is applied in determining when an Exploration and Evaluation
Asset demonstrates technical feasibility and commercial viability and transitions to the development
stage, requiring reclassification to mine under construction within non-current assets.
Share-based payments
The share-based payments expense is estimated using the Black-Scholes options-pricing model as
measured on the grant date to estimate the fair value of stock options, which requires inputs in
calculating the fair value for share-based payments expense, included in profit or loss and share-
based issuance costs, included in shareholders’ equity. This model involves the input of highly
subjective assumptions, including the expected price volatility of the Company’s common shares and
the expected life of the options. The value of the share-based payment expense for the period along
with the assumptions and model used for estimating fair value for share-based compensation are
disclosed in Note 9.
Income taxes
The estimation of income taxes, includes evaluating the recognition of deferred tax assets based on
an assessment of the Company’s ability to utilise the underlying future tax deductions against future
taxable income, prior to expiry of those deductions. Management assesses whether it is probable
that some, or all of the recognised or unrecognised deferred income tax assets will not be realised.
The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable
income, which in turn is dependent upon the successful discovery, extraction, development and
commercialisation of mineral reserves. To the extent that management’s assessment of the
Company’s ability to utilise future tax deductions changes, the Company would be required to
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
recognise more or fewer deferred tax assets, and deferred income tax provisions or recoveries could
be affected. No deferred tax assets have been recognised by the Group at this stage.
Impairment
Assets, including property, plant and equipment, exploration and evaluation and mine under
construction, are reviewed for impairment whenever events or changes in circumstances indicate
that their carrying amounts exceed their recoverable amounts, which is the higher of fair value less
cost of disposal (“FVLCD”) and value in use. The assessment of the recoverable amounts often
requires estimates and assumptions such as discount rates, exchange rates, commodity prices,
rehabilitation and restoration costs, future capital requirements and future operating performance.
Changes in such estimates could impact recoverable values of these assets. Estimates are reviewed
regularly by management.
Going concern
The preparation of these financial statements requires management to make judgments regarding
the going concern of the Company as disclosed in Note 1. As at June 30, 2018 the Company had
working capital of $37,988,198. Additional financing will be required for the Company to continue as
a going concern.
D. CASH AND CASH EQUIVALENTS
Cash consists of cash on hand and of deposits in banks.
E. FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
The functional currency of an entity is the currency of the primary economic environment in which
the entity operates. Following the change in functional currency outlined above, the functional
currency of all group entities is the United States dollar.
Transactions and balances in currencies other than the United States dollar are recorded at
exchange rates prevailing on the dates of the transactions. At the end of each reporting period,
monetary assets and liabilities denominated in foreign currencies are translated at the period-end
exchange rate, while non-monetary assets and liabilities are translated at historical rates. Revenues
and expenses are translated at the exchange rates approximating those in effect on the date of the
transactions. Exchange gains and losses arising on translation are included in the statement of loss
and comprehensive loss.
Prior to the change in functional currency of the parent entity, the financial results and position of
foreign operations, whose functional currency was different from the reporting currency were
translated as follows:
I. assets and liabilities were translated at period-end exchange rates prevailing at that reporting
date;
II. income and expenses were translated at average exchange rates for the period; and
III. equity items were translated at historical rates.
Exchange gains and losses were included as part of the foreign currency translation reserve on the
statement of financial position.
F. EXPLORATION AND EVALUATION ASSETS
Recognition and measurement
Exploration and Evaluation Costs are those costs required to find a mineral property and determine
technical feasibility and commercial viability. Exploration and Evaluation Costs include costs to
establish an initial mineral resource and determine whether inferred mineral resources can be
upgraded to measured and indicated mineral resources and whether measured and indicated
mineral resources are commercially viable. Costs incurred before the Company has obtained the
legal right to explore an area are recognised in the consolidated statement of loss and
comprehensive loss.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Exploration and Evaluation Costs relating to the acquisition of, exploration for and development of
mineral properties are capitalised and include, but are not restricted to: drilling, trenching, sampling,
surveying and gathering exploration data; tunnelling and development, calculation and definition of
mineral resource; test work on geology, metallurgy, mining, geotechnical and geophysical; and
conducting geological, geophysical, engineering, environmental, marketing and financial studies.
Administration costs that do not relate directly to specific exploration and evaluation activity for
capitalised projects are expensed as incurred.
Impairment
All capitalised Exploration and Evaluation Expenditures are monitored for indications of impairment.
Indicators of impairment include, but are not limited to:
I. the period for which the right to explore is less than one year;
II. further exploration expenditures are not anticipated;
III. a decision to discontinue activities in a specific area; and
IV. the existence of sufficient data indicating that the carrying amount of an Exploration and
Evaluation Asset is unlikely to be recovered from the development or sale of the asset.
Where a potential impairment is indicated, assessments are performed for each area of interest. To
the extent that Exploration and Evaluation Assets are not expected to be recovered, they are charged
to the consolidated statement of loss and comprehensive loss.
Reclassification to Mine under construction
Capitalised Exploration and Evaluation Costs for a project are classified as such until the project
demonstrates technical feasibility and commercial viability. Upon demonstrating technical feasibility
and commercial viability, and subject to an impairment analysis, capitalised exploration costs are
transferred/reclassified to Mine under construction within non-current assets. Demonstration of
technical feasibility and commercial viability generally coincide with a board decision and approval to
commence development and construction of a mine. This assessment also includes an assessment
of initial development funding required, as well as the availability of such funds. In addition, the
assessment includes the estimation of projected future operating cash flows based on a detailed
mine design plan supporting the extraction and production of established proven and probable
reserves and an estimate of mineral resources expected to be converted into reserves in the future
and includes initial construction and sustaining capital expenditures. However, this determination
may also be impacted by management’s assessment of certain modifying factors including legal,
environmental, social and governmental factors. All subsequent expenditures on the development,
construction, installation or completion of infrastructure facilities are capitalised as part of Mine under
construction within non-current assets.
G. PLANT AND EQUIPMENT
Plant and equipment is carried at cost, less accumulated depreciation and accumulated impairment
losses. Depreciation is recognised using the straight-line method at the following annual rates:
Motor vehicle 3-5 years
Computer equipment 2 years
Plant and machinery 5-10 years
Land not depreciated
H. SHARE-BASED PAYMENTS
The stock option plan allows Company employees and consultants to acquire shares of the
Company. The fair value of options granted is recognised as a share-based payment expense with
a corresponding increase in equity. An individual is classified as an employee when the individual is
an employee for legal or tax purposes (direct employee) or provides services similar to those
performed by a direct employee. Consideration paid on the exercise of stock options is credited to
capital stock.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The fair value is measured at grant date and each tranche is recognised over the period during which
the options vest. The fair value of the options granted is measured using the Black-Scholes option
pricing model, taking into account the terms and conditions upon which the options were granted.
At each financial position reporting date, the amount recognised as an expense is adjusted to reflect
the number of stock options that are expected to vest. Where equity instruments are granted to
employees, they are recorded at the fair value of the equity instrument granted at the grant date. The
grant date fair value is recognised in the statement of loss over the vesting period, described as the
period during which all the vesting conditions are to be satisfied. Where equity instruments are
granted to non-employees, they are recorded at the fair value of the goods or services received in
the statement of loss. Amounts related to the issuance of shares are recorded as a reduction of
capital stock. When the value of goods or services received in exchange for the share-based
payment cannot be reliably estimated, the fair value of the shares or equity instruments issued is
used.
I. INCOME TAXES
Deferred tax is recorded using the liability method, providing for temporary differences, between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes. Temporary differences are not provided for relating to goodwill not deductible for
tax purposes, the initial recognition of assets or liabilities that affect neither accounting or taxable
loss, and differences relating to investments in subsidiaries to the extent that they will probably not
reverse in the foreseeable future. The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted at the reporting date. A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be available against which the asset can be
utilised.
J. BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
The basic earnings (loss) per share is computed by dividing the net earnings (loss) attributable to
ordinary shareholders of the parent company by the weighted average number of common shares
outstanding during the year. Diluted earnings per share reflects the potential dilution of common
share equivalents, such as outstanding stock options and share purchase warrants, in the weighted
average number of common shares outstanding during the period, if dilutive. For this purpose, the
“treasury stock method” is used for the assumed proceeds upon the exercise of stock options and
warrants that are used to purchase common shares at the average market price during the period.
K. PROVISION FOR ENVIRONMENTAL REHABILITATION
The Company recognises liabilities for legal or constructive obligations associated with the retirement
of Exploration and Evaluation Assets and plant and equipment. The net present value of future
rehabilitation costs is capitalised to the related asset along with a corresponding increase in the
rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that reflects the
time value of money, are used to calculate the net present value. The Company’s estimates of
reclamation costs could change as a result of changes in regulatory requirements, discount rates
and assumptions regarding the amount and timing of the future expenditures. These changes are
recorded directly to the related assets with a corresponding entry to the rehabilitation provision.
L. CAPITAL STOCK
Common shares are classified as equity. Incremental costs directly attributable to the issue of
common shares and stock options are recognised as a deduction from equity. Common shares
issued for consideration other than cash, are valued based on their market value at the date the
shares are issued. The Company has adopted a residual value method with respect to the
measurement of shares and warrants issued as private placement units. The Company first values
the warrants at their fair value using option pricing methodologies. The balance is allocated to the
common shares.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
M. MINE UNDER CONSTRUCTION
Upon completion of a technical feasibility study determining the commercial viability of extracting a
mineral resource, as well as a board decision to mine and project finance being substantially in place,
exploration and development expenditures are transferred to Mine under construction. All
subsequent expenditures on the construction, installation or completion of infrastructure facilities are
capitalized to mine under construction until the commencement of commercial production.
Development expenditures are net of proceeds from sale of ore extracted during the development
phase. After commercial production starts, all assets included in Mine under construction are
transferred to Property, Plant and Equipment. Capitalized development expenditures are not
depreciated until the assets are ready for their intended use. Upon completion of construction, mining
assets are amortized on a unit of production basis which is measured by the portion of the mine’s
economically recoverable ore reserves produced during the period.
The Company assesses the stage of each mine under construction to determine when a mine has
moved into the commercial production phase. Capitalization of costs, including certain mine
development and construction costs, ceases when the related mining property has reached a pre-
determined level of operating capacity intended by management. Costs incurred prior to this point,
including depreciation of related plant and equipment, are capitalized and proceeds from sales during
this period are offset against capitalized costs.
N. FINANCIAL INSTRUMENTS
Financial assets
The Company classifies its financial assets into one of the following categories:
Loans and receivables – these assets are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are carried at amortised cost using the
effective interest method less any provision for impairment.
Held-to-maturity investments – these assets are non-derivative financial assets with fixed or
determinable payments and fixed maturities that the Company's management has the positive
intention and ability to hold to maturity. These assets are measured at amortised cost using the
effective interest method less any provision for impairment.
Financial liabilities
The Company classifies its financial liabilities into one of the following categories:
Fair value through profit or loss – this category comprises derivatives and financial liabilities incurred
principally for the purpose of selling or repurchasing in the near term. They are carried at fair value
with changes in fair value recognised in profit or loss.
Other financial liabilities – this category consists of liabilities carried at amortised cost using the
effective interest method.
O. IMPAIRMENT OF ASSETS
At the end of each reporting period, the Company’s assets are reviewed to determine whether there
is any indication that those assets may be impaired. If such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable
amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the
amount that would be obtained from the sale of the asset in an arm’s length transaction between
knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. If the recoverable amount
of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount and the impairment loss is recognised in profit or loss for the
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
period. For an asset that does not generate largely independent cash flows, the recoverable amount
is determined for the cash-generating unit to which the asset belongs.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-
generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that
does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is
recognised immediately in profit or loss.
P. NEW STANDARDS AND INTERPRETATIONS
Standards and interpretations effective and adopted in the current year;
Standard/Interpretation Effective date: Years Impact
beginning on or after
IFRS 9 Financial Instruments January 1, 2018 No material impact
IFRS 15 Revenue from January 1, 2018 No material impact
Contracts with Customers
Amendments to IFRS 15: January 1, 2018 No material impact
Clarifications to IFRS 15
Revenue from Contracts with
Customers
Amendments to IFRS 2: January 1, 2018 No material impact
Classification and
Measurement of Share-based
Payment Transactions
Amendments to IRS 4: January 1, 2018 No material impact
Applying IFRS 9 Financial
Instruments with IFRS 4
Insurance Contracts
Standards and interpretations not yet effective and not early adopted
Standard/Interpretation Effective date: Years Impact
beginning on or after
Amendments to IFRS 10 and Not Applicable No material impact
IAS 28: Sale or Contribution of
Assets between and Investor
and its Associate of Joint
Venture
IFRS 16 Leases January 1, 2019 No material impact
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
3. PREPAIDS AND OTHER RECEIVABLES
June 30 December 31
2018 2017
Item USD USD
Current
Supplier prepayments* 16,497,305 8,545,424
Tax prepayment** 273,112 63,811
Deposits and other receivables 501,998 343,209
17,272,415 8,952,444
Non-current
Environmental deposit in DRC*** 242,466 242,466
Tax prepayment** 240,186 221,273
482,652 463,739
* Supplier prepayments relate to contractors and equipment ordered for the mine under construction.
**The tax prepayment relates to costs incurred by the Group’s subsidiary in the DRC on upgrading a public road in the DRC.
It has been agreed that this expenditure can be off-set against future provincial taxes due by the Group’s subsidiary in the
DRC.
***The environmental deposit in the DRC relates to funds deposited with the central bank in the DRC. These funds will be
utilised toward any future environmental rehabilitation activities. The deposit will be returned to the Company in the event that
the funds are not utilised.
4. CONSUMABLE STORES
June 30 December 31
2018 2017
USD USD
Consumables 1,633,417 1,155,564
Consumable stores consist of inventories of diesel, personal protective equipment and road building
supplies. These items are likely to be capitalised as part of development activities when they are
consumed as part of the mine under construction.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
5. PLANT AND EQUIPMENT
Depreciation Computers
and Motor Plant and
equipment Land vehicle machinery Total
USD USD USD USD USD
Cost
Balance, January 1, 2017 84,047 271,029 405,014 521,836 1,281,926
Additions 36,008 233,103 609,379 2,433,845 3,312,335
Disposals (13,000) (13,000)
Balance, December31,2017 120,055 504,132 1,001,393 2,955,681 4,581,261
Write offs - - (503,345) (503,345)
Additions 28,222 202,771 117,637 612,188 960,818
Balance, June 30,2018 148,277 706,903 1,119,030 3,064,524 5,038,734
Accumulated depreciation
Balance, January 1, 2017 (29,616) - (143,053) (63,213) (235,882)
Depreciation during the year (18,530) - (184,263) (84,780) (287,573)
Disposals 10,021 - 10,021
Balance, December 31, 2017 (48,146) - (317,295) (147,993) (513,434)
Depreciation during the period (11,805) - (124,051) (68,724) (204,580)
Depreciation capitalised during the
period - - - (240,794) (240,794)
Balance, June30, 2018 (59,951) - (441,346) (457,511) (958,808)
Net closing value
Balance, December 31, 2017 71,909 504,132 684,098 2,807,688 4,067,827
Balance, June 30, 2018 88,326 706,903 677,684 2,607,013 4,079,926
6. MINE UNDER CONSTRUCTION
June 30, December 31,
2018 2017
USD USD
Opening balance 99,504,474 -
Additions during the period 46,480,782 -
Transfer from Exploration and Evaluation Assets (Note 7) - 97,529,580
Rehabilitation and closure asset (Note 12) - 1,974,894
145,985,256 99,504,474
Mine under construction relates to the Company’s Bisie Tin Project in the DRC. This asset was
reclassified from Exploration and Evaluation assets during December 2017, after an impairment
assessment had been performed (refer to Note 7 for additional information). Mines under
construction are not depreciated until construction is completed. This is signified when the mining
project has reached a pre-determined level of operating capacity as intended by management.
Revenues realized before commencement of commercial production (“pre-commercial production
revenue”) are recorded as a reduction of the respective mining asset.
A. IMPAIRMENT INDICATOR ASSESSMENT
In December 2017, the Company assessed the technical feasibility and commercial viability of its
Bisie Project, together with the availability of project funding, and formally approved the
commencement of full scale development activities, resulting in the reclassification of the Exploration
and Evaluation Asset to Mine under construction within non-current assets.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
6. MINE UNDER CONSTRUCTION (Continued)
At the end of each reporting period, an impairment indicator assessment of the carrying value of the
Mine Under Construction asset is performed. For the period under review there were no indicators
of impairment.
7. EXPLORATION AND EVALUATION ASSETS
Exploration and Evaluation Assets consist of:
Bisie
USD
Project acquisition costs
January 1, 2017 33,822,040
Reallocation to mine under construction (Note 6) (33,822,040)
December 31, 2017 and June 30, 2018 -
Capitalised exploration costs:
January 1, 2017 37,146,151
Costs incurred during the year 28,762,839
Reallocation to mine under construction (Note 6) (63,707,540)
December 31, 2017 2,201,450
Costs incurred during the period -
June 30, 2018 2,201,450
Total Exploration and Evaluation Assets:
Balance, December 31, 2017 2,201,450
Balance, June 30, 2018 2,201,450
Exploration and evaluation assets remaining on the balance sheet at period end relate to expenses
incurred on the Company’s exploration license and at the Mpama South deposit.
B. BISIE PROJECT
The Company owns an indirect 80.75% interest in Alphamin Bisie Mining SA (formerly MPC SARL),
a company incorporated in the Democratic Republic of the Congo and the holder of five exploration
permits and one mining/exploitation permit constituting the Bisie Tin Project. The mining permit is
valid until 2045. See related parties Note 10 for further information on the ownership of Alphamin
Bisie Mining SA.
C. ACQUISITION OF ADJOINING BISIE PROJECT MINING LICENSE IN DEMOCRATIC
REPUBLIC OF THE CONGO
During September 2013, the Company entered into an agreement to acquire an exploration license,
which adjoins its Bisie Project in North Kivu Province of the Democratic Republic of the Congo. The
Company paid $1,025,000 for the license.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
December 31,
June 30, 2018
2017
USD USD
Accounts payable 75,718 4,096,766
Accrued liabilities 7,455,980 1,607,896
Payroll accruals 18,609 50,446
Payroll and withholding tax liabilities 293,421 210,707
7,843,728 5,965,815
Accounts payable and accrued liabilities are mainly comprised of amounts outstanding for purchases
relating to exploration, evaluation and development activities and amounts payable for professional
services. The credit term period for purchases typically ranges from 30 to 120 days.
9. CAPITAL STOCK AND RESERVES
A. CAPITAL STOCK
The authorised capital stock of the Company consists of an unlimited number of common shares
without par value, of which 786,233,993 common shares were issued and outstanding at June 30,
2018.
B. CHANGES IN ISSUED CAPITAL STOCK AND RESERVES DURING THE SIX MONTHS
ENDED JUNE 30, 2018
I. On January 22, 2018, the Company raised gross proceeds of CAD$52,815,138
($41,261,827) via brokered and non-brokered private placements of 165,047,306 units (the
“Units”) at a price of CAD$0.32 per Unit. Each Unit consisted of one common share and one?
half of one common share purchase warrant (each whole warrant, a “Warrant”). Each
Warrant entitles the holder to purchase one additional common share of the Company at a
price of CAD$0.40 until January 22, 2021. In addition, the Company settled fees relating to
the Credit Facility in the amount of $1,215,000 through the issue of 4,746,091 Units.
Accordingly, a total of 84,896,692 warrants were issued in the private placements. All
securities sold in the offering were subject to a hold period which expired on May 23, 2018.
Share issue costs of $983,543 were incurred and offset against Capital Stock. The exercise
price of the Warrants is CAD$0.40.
II. On June 7, 2018, the Company issued 17,389,387 shares in consideration for fees relating
the credit facility of $3,396,365.
III. On June 18, 2018, the Company issued 76,800,0000 shares at CAD0.25c per share raising
gross proceeds of $15,000,000. Share issue costs of $42,906 were offset against Capital
Stock.
C. CHANGES IN ISSUED CAPITAL STOCK AND RESERVES DURING THE SIX MONTHS
ENDED JUNE 30, 2017 WERE AS FOLLOWS:
IV. During the quarter ended March 31, 2017, 750 000 stock options expired.
D. STOCK OPTIONS
A summary of the stock option plan and principal terms is set out below.
The Plan provides that the number of common shares that may be purchased under the Plan is a
rolling maximum which shall not exceed 10% of the issued and outstanding shares of the Company
at any time, with appropriate substitutions and/or adjustments in accordance with regulatory policies
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
9. CAPITAL STOCK AND RESERVES (CONTINUED)
if there is a change in the number of issued and outstanding shares resulting from a share split,
consolidation, or other capital or corporate reorganisation. Per TSX Venture Exchange (TSX-V)
policies, the total amount of shares reserved for issuance to any one optionee within a period of 12
months shall not exceed 5% of the outstanding common shares at the time of grant, the total amount
of shares reserved for issuance to any one Consultant (as defined by the Plan) within a period of 12
months shall not exceed 2% of the outstanding common shares at the time of grant, and the total
amount of shares reserved for all persons conducting Investor Relations Activities (as defined by the
Plan) within a period of 12 months shall not exceed 2% of the outstanding common shares at the
time of the grant.
The Plan provides that it is solely within the discretion of the Board of Directors (the “Board”) to
determine which directors, employees and other service providers may be awarded options under
the Plan, and under what terms they will be granted, as well as any amendments or variations to
these terms in the event of an Accelerated Vesting Event (as defined by the Plan). Options granted
under the Plan will be for a term not exceeding ten years from the day the option is granted, as in
line with TSX-V policies. Subject to such other terms or conditions that may be attached to the
particular option granted, an option shall only be exercisable so long as the optionee shall continue
to hold office or provide services to the Company and shall, unless terminated earlier, or extended
by the Board, terminate immediately if said optionee is terminated for cause, terminate at the close
of business on the date which is no later than 90 calendar days after cessation of office or
employment, or in the case of the optionee’s death, terminate at the close of business on the date
which is no later than one year after the date of death, as the case may be. Subject to a minimum
price of CAD$0.10, the options will be exercisable at a price which is not less than the Market Price
(as defined in the policies of the TSX-V) of the Company’s shares at the time the options are granted.
The options are non-assignable. Shares will not be issued pursuant to options granted under the
Plan until they have been fully paid for. The Company will not provide financial assistance to option
holders to assist them in exercising their options. A summary of stock option activity and information
concerning currently outstanding and exercisable options as at June 30, 2018 are as follows
Options outstanding
Number of Weighted
options average
exercise price
# CAD$
Balance, December 31, 2016 4,176,954 0.29
Options expired during the year (750,000) 0.65
Options issued during the year 4,984,800 0.35
Balance, December 31, 2017 and June 30, 2018 8,411,754 0.29
The following table summarises information concerning outstanding and exercisable options at June
30, 2018:
Options outstanding and exercisable
Number Number Expiry date Weighted Remaining
outstanding exercisable average life
# # exercise (years)
price
CAD$
1,518,077 759,039 Aug 15, 2020 0.20 2.13
759,038 379,519 Oct 19, 2020 0.20 2.31
759,038 113,856 Apr 15, 2021 0.20 2.79
390,801 58,620 Oct 15, 2021 0.30 3.30
4,984,800 - July 25, 2022 0.35 4.32
8,411,754 887,550 0.29
All options vest over a three-year period (15% after one year, 35% after two years and 50% after
three years). Options expire five years after the date of issue.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
9. CAPITAL STOCK AND RESERVES (CONTINUED)
The Company recorded a share-based payment expense to the statement of loss and
comprehensive loss of $177,672 for the six months ended June 30, 2018 ($80,955 for the six months
ended June 30, 2017).
The share-based payments expense related to options granted was determined using the Black-
Scholes option pricing model and the following weighted average assumptions:
July October April
2017 2016 2016
Forfeiture rate - - -
Risk free interest rate 1.38% 0.67% 0.58%
Expected life of options in years 3.00 3.00 3.00
Volatility* 114.20% 137.61% 138.50%
Dividend rate 0.00% 0.00% 0.00%
*Calculated as standard deviation of the Company’s historical share price
E. SHARE PURCHASE WARRANTS
A summary of warrants activity and information concerning outstanding warrants as at June 30, 2018
are as follows:
Warrants outstanding
Number of Weighted
warrants average
exercise price
# CAD$
Balance, December 31, 2016 - -
Warrants issued on July 19, 2017 41,257,065 0.4375
Warrants issued on December 15, 2017 4,975,589 0.4000
Balance, December 31, 2017 46,232,654 0.4335
Warrants issued on January 22, 2018 84,896,692 0.4000
Balance, March 31 and June 30, 2018 131,129,436 0.4117
All warrants issued in private placements were accounted for as a financial liability. See Note 11 for
further details.
F. TRANSACTION WITH NON-CONTROLLING INTEREST
The issue of shares in Alphamin Bisie Mining SA (ABM) to the Industrial Development Corporation
of South Africa (IDC) for $7,000,000 during the year ended December 31, 2015 was accounted for
as a shareholder transaction resulting in an increase of the non-controlling interest of $6,996,951.
The balancing $3,049 was taken to equity in line with IFRS 10. The receipt of the third tranche from
the IDC in the amount of $3,000,000 in May 2016 resulted in an additional increase in the non-
controlling interest of $2,798,969. The balancing $201,031 was taken to equity in line with IFRS 10.
See Note 10 for additional information. The IDC invested an additional $6,613,152 in ABM in
December 2017. The transaction was accounted for as a shareholder transaction resulting in an
increase of the non-controlling interest of $8,229,107. The balancing $1,615,955 was taken to equity
in line with IFRS 10. During the quarter ended June 30, 2018 the IDC invested a further $7,086,834
Alphamin, resulting in an increase in non-controlling interest of $8,982,021. The balancing
$1,895,187 was taken to equity. The IDC and the DRC government maintained their 80.75%, 14.25%
and 5% interests in ABM following the 2017 and 2018 transactions.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
10. RELATED PARTY TRANSACTIONS
KEY MANAGEMENT PERSONNEL
Key management personnel include those persons having authority and responsibility for planning,
directing and controlling the activities of the Company as a whole. The Company has determined
that key management personnel consist of executive and non-executive members of the Company’s
Board of Directors and corporate officers. Remuneration attributed to key management personnel
can be summarised as follows:
June 30 June 30
2018 2017
Item Relationship USD USD
Director and Officer fees Directors, officers 703,819 437,908
Secretarial and administrative fees Corporate Secretary 18,000 18,000
Share based payments Directors, officers 46,802 80,954
Total current amounts due to related parties of $223,833 (December 31, 2017 – $304,468) are due
or accrued to officers and directors.
Non-current amounts due to related parties of $11,31,062 (December 31, 2017 – $3,150,071) are
due to Tremont Master Holdings. The amount includes long term debt of $10,962,571 and capitalized
interest due of $373,561. See Note 13 for further details.
In line with the DRC mining code, the Company’s subsidiary Alphamin Bisie Mining SA (ABM)
granted 5% of its share capital to the Government of the DRC during the 2015 financial year. To
facilitate this ABM divided their share capital into two classes, “A” shares and “B” shares. The “B”
shares are intended to be held solely by the Government of the DRC and are non-dilutable at 5% of
total share capital (“A” plus “B”) in issue. “B” class shares have normal voting rights on a pro rata
bases and the DRC Government has a right to appoint one director to the ABM board. The 5% is a
free carry under the terms of the DRC mining code, hence the DRC Government is not required to
contribute on granting of their initial holding or further issues to maintain their stake at 5%. The
percentage is fixed under the DRC mining code and management does not anticipate any changes
in this regard in the short to medium term.
In November 2015, the Company entered into an agreement with the Industrial Development
Corporation of South Africa Limited (IDC) pursuant to which the IDC could invest up to $10,000,000
directly into ABM, in three tranches, subject to the completion of certain milestones. As at the 2016
financial year end the Company had received all tranches, resulting in an ownership in ABM of
14.25% by the IDC. Under the terms of the shareholders’ agreement the IDC were granted an “offtake
option”. Under the offtake option the IDC is entitled, as long as it owns 11% or more of ABM “A” class
shares, to an option to purchase from ABM a portion of the Company’s mineral production. The
percentage of production that the IDC wishes to acquire, cannot exceed their percentage holding in
the “A” class shares of ABM at the date of exercise. The IDC shall only be able to benefit from the
“offtake option” if the relevant percentage of the Company’s production is not already committed to
other buyers in respect to the relevant period. In December 2017 the IDC invested an additional
$6.6m in ABM as part of a share issuance in which all shareholders maintained their pro rata share.
The offtake acquired can only be for a minimum of six months and a maximum of twelve months and
must be purchased at the same average price and other terms as ABM is able to, and would
otherwise intend to, sell its product to other third-party purchasers. The “offtake option” is not
transferrable. Under the terms of the shareholders’ agreement, a qualifying “seller”, defined as a
shareholder, or two or more shareholders acting together, holding more than 50% of the “A” class
shares of ABM, has drag along and tag along rights that are normal in transactions of this nature.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
10. RELATED PARTY TRANSACTIONS (CONTINUED)
The IDC has also granted pre-emption rights to the other “A” class shareholders, entitling them to a
right of first refusal on any partial or full sale of their shares.
The IDC may propose (but is not obliged) at any time during the “Exit Period” that Alphamin
Resources acquire all, but not less than all of its shares in exchange for shares in Alphamin
Resources (the Share Swap), which shall be based on the then fair market value of the “A” class
shares, and on terms to be mutually agreed to by Alphamin Resources and the IDC. The “Exit Period”
refers to the earlier of five years from the date of signature, or one year from the date the Bisie Tin
Project reaches 90% of its intended maximum production, having been fully funded and fully
implemented.
11. WARRANTS
On January 22, 2018, The Company issued 84 896 692 warrants in the private placement as out
lined in Note 9. The Company assessed the conditions of these warrants in terms of IAS 32 and IAS
39 and concluded that, as a result of the currency of the warrants (CAD$) being different to that of
the Company’s functional and presentation currency (USD), coupled with the fact that the warrants
were issued as part of a private placement, rather than a rights issue, that the warrants need to be
accounted for as a financial liability with fair value through profit and loss. The warrants were valued
on the date of issue and the related fair value of $9,010,401 was raised as a liability (the balance of
the cash received in the respective private placements was accounted for in equity as Capital Stock).
The Company valued the warrants using the Black-Scholes pricing model with the assumptions
below.
January 22, December July 19,
2018 15, 2017
2017
Strike price CAD$0.40 CAD$0.40 CAD$0.4375
Risk free interest rate 1.24% 1.24% 1.24%
Expected life of options in years 3.00 3.00 3.00
Annualised volatility 70% 70% 70%
Dividend rate 0.00% 0.00% 0.00%
All warrants in issue were revalued on June 30, 2018 using the same valuation methodology as
described above and, on that date, the fair value of the warrants was calculated at $9,954,606. The
movement in the warrant liability was credited to the statement of loss and comprehensive loss
(Three six ended June 30, 2018: Credit of $2,531,962). The use of an option pricing model to
determine the fair value of these warrants falls within Level 2 of IFRS 13’s fair value hierarchy: Level
2 – Inputs other than quoted prices that are observable for the asset or liability either directly or
indirectly.
12. PROVISION FOR CLOSURE AND RECLAMATION
The Company recognizes a provision related to its constructive and legal obligations in the Congo
to restore its properties. The cost of this obligation is determined based on the expected future level
of activity and costs related to decommissioning the mines and restoring the properties. The
provision for the Bisie mine is calculated at the net present value of the estimated future
undiscounted cash flows using an interest rate of 3.63% (December 31, 2016 –3.63%) a mine life
of 14 years and estimated future undiscounted liability of $6,651,000 (December 31, 2017 – $
6,651,000). The Company recognized a corresponding asset classified as mine under construction.
BISIE
Balance, December 31, 2015 and 2016 -
Additions during the year 1,974,894
Balance, December 31, 2017 and June 30, 2018 1,974,894
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
13. LONG TERM DEBT
On November 9, 2017 the Company entered into a credit facility of up to $80 million from a
syndicate of lenders for the construction of the Bisie Tin Mine. The credit facility provided for an
initial advance of $10 million, which was drawn down in December 2017. A further $25 million was
drawn down in June 2018.
The key terms of the credit facility are:
1. US$80 million senior secured, non-revolving term credit facility
2. Available, subject to fulfilment of conditions precedent, for an 18-month period following
the initial advance date
3. Five-year term commencing on the initial advance date
4. Coupon of 14 percent plus the greater of US dollar 3-month LIBOR and 1 percent per
annum
5. Interest to be capitalized until the earlier of achievement of commercial production and 24
months following the initial advance date, repayable monthly thereafter
6. No principal repayments until March 31, 2020, with repayments thereafter in 11 equal
quarterly instalments
7. Cash sweep of 30 percent of excess cash flow with effect from April 30, 2020
8. Work fee of 2.9 percent payable as to 50 percent upon the initial advance and the balance
upon the first subsequent advance
9. Transaction costs of US$1.77 million to be paid upon the later of the initial advance and
completion of the equity financing and US$2.23 million to be paid pro rata on subsequent
advances
10. Termination payment in certain circumstances, not to exceed value of work fee and bonus
shares not previously paid
11. A security package typical for a transaction of this nature including a mortgage over the
Company’s shares in each subsidiary, cash balances, moveable assets and the mining
license PE1355 covering the Mpama North Tin Project.
Of the $80 million facility, $25 million will be provided by Tremont Master Holdings, a 48%
shareholder in the Company. Tremont will also receive their pro rata share of applicable fees and
accrued interest.
Long-term debt Related party debt Non-related party debt Total
USD USD USD
Balance, December 31, 2016 - - -
Drawdowns during the year 3,125,000 6,875,000 10,000,000
Capitalised interest 25,071 45,731 70,802
Balance, December 31, 2017 3,150,071 6,920,731 10,070,802
Drawdowns during the period 7,812,500 17,187,500 25,000,000
Capitalised interest 348,491 775,219 1,123,710
Fees capitalised (1,613,637) (3,550,000) (5,163,637)
Amortisation of capitalised fees 46,023 101,250 147,273
Balance, June 30, 2018 9,743,448 21,434,700 31,178,148
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
14. SEGMENTED INFORMATION
The Company considers its business to consist of one reportable operating segment, being the
acquisition, exploration, evaluation and if warranted, development of mineral deposits. As at reporting
date, substantially all of the Company’s plant and equipment and Exploration and Evaluation Assets
were located in the Democratic Republic of the Congo. In assessing potential operating segments,
the Company has considered the information reviewed by the Chief Operating Decision Maker
(CODM). The Company has identified the Board of Directors as the CODM and is satisfied that the
information as presented in the financial statements is the same as that assessed by the CODM for
management reporting purposes. The Company has one asset, in one commodity in one country.
15. INCOME TAX
In Mauritius, Alphamin Resources Corp. is a Category 1 Global Business License Company for the
purpose of the Financial Services Act 2007. The Company is subject to income tax at 15%. It is,
however, entitled to a tax credit equivalent to the higher of foreign taxes paid and 80% of the Mauritius
tax on its foreign source income, leaving a maximum effective tax rate of 3%. Capital gains of the
Company are exempt from tax in Mauritius. At June 30, 2018, the Company was not liable for income
tax as it had not generated any taxable income to date. The Company does not recognise a deferred
tax asset in respect of tax losses brought forward due to uncertainty around the future recoverability
of such losses.
In the DRC, Alphamin Bisie Mining is exposed to a tax rate for mining companies of 30%. This is the
main operating subsidiary of the group. At June 30, 2018, the Company was not liable for income tax
as it had not generated any taxable income to date. The Company does not recognise a deferred tax
asset in respect of tax losses brought forward due to uncertainty around the future recoverability of
such losses.
16. CAPITAL MANAGEMENT
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue
as a going concern in order to pursue the exploration, evaluation and development of its mining
properties and to maintain a flexible capital structure which optimises the costs of capital at an
acceptable risk. The Company currently depends on shareholder equity and a credit facility for up to
$80,000,000. The capital structure of the Company currently consists of common shares, stock
options, share purchase warrants and long-term debt. Changes in the equity accounts of the
Company are disclosed in Note 9 and changes in long term debt is disclosed in Note 13. The
Company manages the capital structure and makes adjustments to it in light of changes in economic
conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital
structure, the Company may attempt to issue new shares, obtain additional 3rd party loan financing
or dispose of assets. In order to facilitate the management of its capital requirements, the Company
prepares annual expenditure budgets, which are approved by the Board of Directors and updated as
necessary depending on various factors, including capital deployment and general industry
conditions. The Company anticipates continuing to access equity markets and 3rd party financing to
fund continued exploration, evaluation and development of its mining properties and the future growth
of the business.
17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company’s financial instruments are exposed to a number of financial and market risks,
including credit, liquidity and foreign exchange risks. The Company may, or may not, establish from
time to time active policies to manage these risks. The Company does not currently have in place
any active hedging or derivative trading policies to manage these risks, since the Company’s
management does not believe that the current size, scale and pattern of its operations would warrant
such hedging activities. The Company places its cash with high credit quality financial institutions.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
A. CREDIT RISK
Credit risk is the risk that a counterparty to a financial instrument will not discharge its obligations,
resulting in a financial loss to the Company. The Company has procedures in place to minimise its
exposure to credit risk. Company management evaluates credit risk on an ongoing basis, including
evaluation of counterparty credit rating, monitoring activities related to trade and other receivables
and counterparty concentrations measured by amount and percentage. The primary source of credit
risk for the Company arises from the following financial assets: (1) cash and cash equivalents and
(2) other receivables. The Company has not had any credit losses in the past, nor does it expect to
have any credit losses in the future. At June 30, 2018, the Company has no financial assets that are
past due or impaired due to credit risk defaults. As at period end substantially all of the cash and
cash equivalents balance was concentrated with Standard Bank group. Standard Bank’s average
credit rating is BBB+. The Company’s maximum exposure to credit risk at the reporting date is as
follows:
June 30, December 31,
2018 2017
Item USD USD
Cash and cash equivalents 37,104,533 7,236,425
Other receivables – current 501,988 343,209
Other receivables – non-current 242,466 242,466
Total 37,848,997 7,822,100
B. LIQUIDITY RISK
Liquidity risk is the risk that the Company will not be able to meet its obligations with respect to
financial liabilities as they fall due. The Company’s financial liabilities are comprised of long term
debt, accounts payable and accrued liabilities. The Company frequently assesses its liquidity position
by reviewing the timing of amounts due and the Company’s current cash flow position to meet its
obligations.
The Company manages its liquidity risk by maintaining a sufficient cash balance to meet its
anticipated operational needs. When there are not sufficient funds, the Company has the ability to
reduce or delay its exploration, evaluation, development and corporate spending to preserve
liquidity. The Company’s long-term debt was obtained to facilitate the development of the mining
properties (refer to Note 6). Refer to Note 9 for additional information on repayment terms. The
Company’s accounts payable and accrued liabilities arose as a result of exploration, evaluation,
development and corporate expenses. Payment terms on these liabilities are typically 30 to 120
days from receipt of invoice and do not generally bear interest. The following table summarises
the remaining contractual maturities of the Company’s financial liabilities:
Within After more
0 to 120 days than 12 months
2018 2018
USD USD
Long term debt - 24,883,450
Long term debt – related parties - 11,311,062
Provision for closure and reclamation - 1,974,894
Accounts payable and accrued liabilities 7,843,728 -
Accounts payable and accrued liabilities – related
parties 223,833 -
C. MARKET RISK
Market risk is the risk that the fair value for assets or future cash flows will fluctuate, because of
changes in market conditions. The Company evaluates market risk on an ongoing basis and has
established policies and procedures for mitigating its exposure to foreign exchange fluctuations.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
Other than the possible impact on the recoverable amount of the Company’s mining properties
carried under non-current assets, the Company’s operating cash flows and financial instruments
are not currently exposed to commodity price risk. The fair value movements accounted for
warrants (refer Note 11) are non-cash in nature.
Foreign Exchange Risk
The Company operates on an international basis and therefore, foreign exchange risk exposures
arise from transactions denominated in foreign currencies. The Company is exposed to foreign
currency risk on fluctuations related to financial instruments that are denominated in Canadian
dollars (CAD$). A 10% fluctuation in the USD against the Canadian dollar would affect the net loss
and foreign currency translation reserve by insignificant amounts.
A significant portion of the Company’s development expenditure is exposed to the South African
Rand (ZAR). A significant fluctuation in the ZAR:US$ exchange rate would have a relatively
material impact on the cost of development.
Interest Rate Risk
As at June 30, 2018 the Company had drawn down US$ 35,000,000 against its long-term debt
facility (refer Note 13). These loans are exposed to variable interest rates. Finance costs are
capitalised to Mine under construction during the development phase of the project. A 1% change
in the variable interest rates would not have had a material impact on the finance cost capitalised
during the period. The Company does not earn significant interest on cash balances.
D. FAIR VALUE MEASUREMENT
At June 30, 2018 and December 31, 2017, the carrying values and the fair values of the Company’s
financial instruments are shown in the following table.
June 30, June 30, December December
2018 2018 31, 31,
2017 2017
Carrying Fair Carrying Fair
value value value value
USD USD USD USD
Financial assets
Cash and cash equivalents 37,104,533 37,104,533 7,236,425 7,236,425
Other receivables – current 501,988 501,988 343,209 343,209
Other receivables – non-current 242,266 242,266 242,466 242,466
Financial liabilities
Long term debt 21,434,700 21,434,700 6,920,731 6,920,731
Long term debt – related parties 9,743,448 9,743,448 3,150,071 3,150,071
Provision for closure and reclamation 1,974,894 1,974,894 1,974,894 1,974,894
Accounts payable and accrued liabilities 7,550,307 7,550,307 5,755,108 5,755,108
Accounts payable and accrued liabilities –
related parties 223,833 223,833 304,468 304,468
Warrants 9,954,606 9,954,606 3,476,167 3,476,167
Financial instruments measured at fair value are classified into one of three levels in the fair value
hierarchy according to the relative reliability of the inputs used to estimate the fair values. The
three levels of the fair value hierarchy are:
• Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities.
• Level 2 – inputs other than quoted prices that are observable for the asset or liability either
directly or indirectly.
• Level 3 – inputs that are not based on observable market data.
The fair value of the Company’s financial assets and financial liabilities approximate their carrying
values (all within Level 3 of the fair value hierarchy).
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
18. HEADLINE AND DILUTED HEADLINE LOSS PER SHARE
The Company’s shares are also listed on the Johannesburg Stock Exchange Alt.X which
requires the Company to present headline and diluted headline loss per share. Headline
loss per share is calculated by dividing headline loss attributable to equity holders of the
Company by the weighted average number of common shares issued and outstanding
during the period. Diluted headline loss per share is determined by adjusting the weighted
average number of shares for all potential dilutive effects. For the three months ended June
30, 2018 and 2017, the Company’s diluted headline loss per share is identical to the
headline loss per share as inclusion of stock options and warrants would be anti-dilutive.
The following table summarises the adjustments to loss attributable to equity shareholders
for the purposes of the calculation.
2018 2017
USD USD
Loss attributable to equity shareholders 1,399,496 2,987,697
Adjusted for;
Loss on disposal of property, plant and equipment 503,346 -
Headline loss attributable to equity shareholders of the company 1,902,842 2,987,697
Weighted average number of shares issued and outstanding 679,577,354 429,785,897
Headline loss and diluted headline loss per share 0.00 0.01
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
19. SIGNIFICANT OPERATING SUBSIDIARIES WITH NON-CONTROLLING
INTEREST
The table below shows details of the non-wholly owned subsidiary of the Group that had material
non-controlling interests:
Proportion of Profit/(loss) allocated Accumulated non-
ownership and voting to non-controlling controlling interests
rights held by non- interests
controlling interests
Company June 30, December June 30, June 30, June 30, December
2018 31, 2017 2018 2017 2018 31, 2017
USD USD USD USD
Alphamin Bisie
Mining SA 19.25% 19.25% (906,688) (612,582) 17 481 895 17 970 282
Summarised financial information in respect of the above subsidiaries is set out below.
The summarised financial information below presents amounts before intra-group elimination.
June 30, December
2018 31, 2017
USD USD
Current assets 40,762,768 16,569,426
Non-current assets 103,428,984 57,279,742
Total assets 144,191,752 73,849,168
Current liabilities 7,674,955 4,248,294
Non-current
liabilities 36,194,512 10,072,802
Equity 100,322,285 59,530,072
Total liabilities and
equity 144,191,752 73,849,168
Operating expenses (4,710,070) (6,515,181)
Income tax
expenses - -
Net loss for the
period/year (4,710,070) (6,556,722)
Attributable to
owners of the
Company (3,803,382) (5,294,553)
Attributable to non-
controlling interests (906,688) (1,262,169)
20. SUBSEQUENT EVENTS
There were no subsequent events which require disclosure in the financial statements.
JSE Designated Advisor
Nedbank Corporate and Investment Banking
29 August 2018 28
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